It is unlikely that Apple will open up NFC for third-party payment solutions

In the wake of the Apple Pay launch in Norway, the fact that only Apple themselves is allowed to provide NFC-based payments through the handsets, making Apple Pay the only option for contactless payments through an iPhone has become a hot topic, and Apple has been reported to the Norwegian competition authority for exploiting their dominant market position to prevent competition. Despite this, it is still unlikely that NFC access for payments will be opened for third-party developers anytime soon.

To give some context, Apple has an estimated market share of more than 60 percent of the smartphone market in Norway. Based on this, it is claimed that Apple may be in breach of the national competition laws. Another issue regarding Apple Pay is that the solution is based on international schemes such as VISA and Mastercard, which represent a significant cost increase compared to national schemes for retailers.

As a response to the claim for NFC access by Australian banks, Apple states that the increased competition claim doesn’t apply, as if the banks were given NFC access, they could start specifically charging customers for using Apple Pay, discouraging the use of the mobile payments platform and thereby reduce competition with their own proprietary wallets. Offering NFC access to the banks also creates significant costs, including negative effects on consumer security and data privacy, the ability for users to select their payment card at the point of sale, and a depreciated customer experience.”

The request by the banks was eventually denied by the ACCC, as the benefits were outweighed by the downsides of granting access to NFC.

The ruling stated among other reasons that mobile payments are still in its infancy, and in rapid change. it was also stated that this would give Apple a competitive disadvantage towards Google in the competition for mobile payments. On this note, it is worth mentioning that Google is paying Apple 3 billion USD per year to remain the default search engine on the iPhone, despite no technology lock-in on search. Another argument from the ruling states that Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers. which corresponds fairly well with the intentions of PSD2.

Mobile payments is undoubtedly a global clash of the titans, where Apple has entered the ring as a serious contender and seeks to utilize the iPhone as a competitive advantage. Opening up for third-party payment apps will significantly weaken that advantage, and that is why it is highly unlikely that Apple will grant NFC access anytime soon.